Benefits For A Disabled Child
A child under age 18 may be disabled, but we don’t need to consider the child’s disability when deciding if he or she qualifies for benefits as a dependent. The child’s benefits normally stop at age 18 unless he or she is a full-time student in an elementary or high school or is disabled.
Children who were receiving benefits as a minor child on a parents Social Security record may be eligible to continue receiving benefits on that parents record upon reaching age 18 if they are disabled.
Adjust All Of Your Annual Earnings For Inflation
Unless youre retiring this year, your future payouts will need to factor in inflation in the years between now and retirement age. The Social Security Administration uses the national average wage indexing series to calculate benefits for retirees, adjusting earnings to account for inflation in the years prior to retirement.
Your Social Security retirement earnings will be adjusted to the average wage two years prior to retirement, attached to taxes taken out with your SSN throughout your lifetime. In 2019, that average wage was $54,099.99, so someone retiring in 2021 will be indexed on that. The IRS will take $54,099.99 and multiply it by the wage ratio for each year prior to that to come up with a wage for every year worked. The Social Security Administration maintains this wage ratio, which is based on the National Average Wage Indexing Series, available here. You can perform this calculation yourself or go to the Social Security website and input the year you plan to retire at the bottom. That will give you the estimated indexing factors for each year going back to your year of birth.
Future Of Social Security
An increase in eligible participants combined with an increase in life expectancy is straining the Social Security program. Because of the financial burden this created, Social Security was amended in 1983, changing the age people can collect full Social Security benefits.
As a result of the 1983 amendments, the retirement age will increase between 2003 and 2026 from age 65 to age 67 with an 11-year gap at which the retirement age will remain at 66, depending on the year of birth.
Economic analysts predict that the Social Security system eventually will pay out more in benefits than it receives in payroll taxes. Analysts have long warned of this shortfall, and they predict the program could be in jeopardy as of 2035.
It is anticipated a reduction in benefits of about 13% or an immediate increase in payroll tax rate from 12.4 to 14.4%, or a little of both, will be needed to allow full payment of scheduled payments for the next 75 years.
As the challenges to meet the needs of millions of retirees continue, policymakers and politicians continue to argue about revamping or privatizing the program. The recent economic downturn has affected jobs and savings programs, further weakening the program. With so many people dependent upon Social Security for retirement benefits, its vital to understand the system and its limitations, as well as to make changes before time runs out.
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How Much Will I Get From Social Security
Your retirement benefit is based on your lifetime earnings in work in which you paid Social Security taxes. Higher income translates to a bigger benefit . The amount you are entitled to is modified by other factors, most crucially the age at which you claim benefits.
For reference, the estimated average Social Security retirement benefit in 2021 is $1,543 a month. The maximum benefit the most an individual retiree can get is $3,148 a month for someone who files for Social Security in 2021 at full retirement age, or FRA .
Youll only know your own amount for sure when you apply, but there are ways to get a sense of it in advance. The quickest and easiest is to use AARPs Social Security Benefits Calculator or check your online My Social Security account. The latter draws on your earnings record on file with the Social Security Administration for the AARP calculator, youll need to provide your average annual income.
Both tools project what you could collect each month if you start Social Security at age 62, the earliest you can file at full retirement age, currently 66 and 2 months and gradually rising to 67 and at age 70. Between 62 and FRA, Social Security reduces your benefit for filing early between FRA and 70, it increases your payment as a reward for waiting.
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Calculate Your Average Indexed Monthly Earnings
Once you have your inflation-adjusted 35 years, youll divide that amount by 420. Thats the number of months in a 35-year period, so it gives you a monthly inflation-adjusted amount. That amount will be rounded down to the nearest lower dollar amount. If you retired today, that would be the amount the SSA would use to determine your monthly Social Security benefit.
If you were taking retirement in 2021, SSA would take your inflation-adjusted, indexed wages for every year prior to 2019. Any wages you earned after 2019 wouldnt be indexed. Assuming those two years were among your 35 highest-earning years, the amount would be added to your total before being divided by 420.
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The Downside Of Claiming Early: Reduced Benefits
Consider the following hypothetical example. Colleen is 62 as of 2022. If Colleen waits until age 67 to collect, she will receive approximately $2,000 a month. However, if she begins taking benefits at age 62, she’ll receive only $1,400 a month. This “early retirement” penalty is permanent and results in her receiving up to 30% less year after year.
However, if Colleen waits until age 70, her monthly benefits will increase another 24% over what she would receive at her FRA, to a total of $2,480 per month.1 If she were to live to age 89, her lifetime benefits would be about $112,000 more, or at least 24% greater, because she waited until age 70 to collect Social Security benefits.2
How Do Ssdi And Social Security Retirement Work Together
SSDI pays out your full retirement benefits until you qualify to draw them under the traditional Social Security retirement scheme. Once you reach full retirement age based on the year you were born, the SSA will automatically start your retirement benefits and cease your SSDI payments.
The SSA allows you to file for retirement benefits as early as age 62, or wait and receive your full benefit amount when you reach full retirement age. Depending on what year you were born, this may vary from 65 to 67 years old. For most people, it does not make sense to file for early retirement benefits at age 62 if you are already receiving SSDI because of a disability. Your disability payments equal your full retirement amount, and those who opt for early retirement receive reduced benefits.
Imagine that, at age 60, you suffer a back injury leading to a disability. You are approved for SSDI benefits and you begin drawing an amount equal to your full retirement amount. When you reach age 62, nothing changes you continue to draw your full SSDI amount. Once you reach your full retirement age, the SSA swaps you from SSDI to traditional retirement benefits. However, this occurs automatically so you will not see a break in your benefits and do not need to do anything to ensure this happens.
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Can A Person Who Is Due A Public Pension Also Collect Social Security Benefits
Two rules could reduce benefits for people who are also entitled to a public pension on earnings not covered by Social Security.
One rule is the windfall elimination provision , which applies to people who worked at jobs covered by Social Security but also worked as noncovered government employees and are due a pension.
When it is time to claim benefits, many people are unprepared for these cuts, Mr. Blair said. Possible W.E.P.-related reductions are not reflected in the workers Social Security statement, which shows the history of annual earnings and estimates of future benefits only for jobs covered by Social Security.
You can have someone who looks at the Social Security statement and it shows a benefit of $1,000 at full retirement age, Mr. Blair said. But the individual a teacher who is due a public pension, for example may be surprised later if the benefit is much lower, he said.
In addition to W.E.P. reductions, a government pensioner who applies for a Social Security spousal or survivor benefit can face reductions. The government pension offset reduces those benefits by two-thirds of the government pension.
Pensioners are exempt from the W.E.P. offset if they paid into Social Security for 30 years or more in jobs with substantial earnings .
Can Children Qualify For Social Security
Biological or adopted children or stepchildren can be eligible for Social Security benefits if they meet the following criteria:
- Have a parent who is disabled or retired and eligible for Social Security benefits.
- Are unmarried.
- Are younger than 18 years old or up to age 19 if they are full-time high school students.
- Are 18 years or older and disabled .
The requirements for Social Security survivors benefits are similar, except that the parent must be deceased for the child to qualify.
Supplemental Security Income is a separate program for Americans with limited incomes and other resources. Recipients must generally be 65 or older, blind, or disabled. But SSI is also available to children under age 18 in certain cases. To qualify:
- The child must have a physical or mental impairment that results in marked and severefunctional limitations.
- The impairment or impairments must have lasted or be expected to last for a continuous period of at least 12 months or be expected to result in death.
In the case of blindness, that duration requirement doesn’t apply.
Social Security rules limit how much money a family may receive in total benefits.
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No : Don’t Earn Too Much If You’re Working In Retirement
If you’re planning to start collecting benefits before your full retirement age and you want to work some then, too, be careful, because your benefits may be reduced. The Social Security Administration explains: “If you’re younger than full retirement age during all of 2018, we must deduct $1 from your benefits for each $2 you earn above $17,040.” The year you reach your full retirement age, the earning limit jumps to $45,360, and the penalty decreases to $1 withheld for every $3 earned above the limit. Any money withheld isn’t lost, though. It’s factored into the benefit checks you receive later, which end up increased.
Claiming Social Security Benefits At The Right Time Means More Money In Your Pocket Here’s A Guide To Everything From Knowing Your Full Retirement Age To Taking Social Security Spousal Benefits
For many Americans, Social Security benefits are the bedrock of retirement income. Maximizing that stream of income is critical to funding your retirement dreams.
The rules for claiming Social Security benefits can be complex, but this guide will help you wade through the details. By educating yourself about Social Security, you can ensure that you claim the maximum amount to which you are entitled.
Here are 12 essential details you need to know.
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What Happens If The Adult Child Gets Married
If he or she receives benefits as a disabled “adult child,” the benefits generally end if he or she gets married. However, some marriages are considered protected.
The rules vary depending on the situation. Contact a Social Security representative at 1-800-772-1213 to find out if the benefits can continue.
To speed up the application process, complete an Adult Disability Report and have it available at the time of your appointment.
How Will My Retirement Benefits Be Taxed
Approximately one-third of people who collect Social Security benefits are required to pay income taxes on these benefits. Individuals with higher total incomes must include up to 85% of their benefits as income for federal income tax purposes, designated by special step-rate thresholds. However, the taxation thresholds for your benefits arent currently indexed for inflation.
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Social Security Disability Benefits
The definition of disabled held by the SSA is quite strict. You only qualify for Social Security disability benefits if you are severely disabled with a condition that entirely prevents your workingand is expected to last a year or longer or result in your death.
You also must have earned enough credits to receive payments. If you are at least age 62, you will need to have earned the full 40 credits to qualify for disability payments. Younger applicants require fewer credits, down to a minimum of six credits for those younger than 24. You also need to have been working when the disability began. Your spouse and children may qualify for benefits as well, potentially receiving up to half of the amount to which you are entitled each month.
If approved, then your disability benefits will begin six months after the date when your disability began. Payments are based on your lifetime earnings.
Social Security Disability Programs
In addition to retirement benefits, the Social Security Administration manages two programs that provide benefits to people who are disabled or blind.
- Social Security Disability Insurance Program
- SSDI supports disabled or blind individuals by providing benefits based on their workers contributions to the Social Security trust fund. Your contributions are based on your earnings or your spouses or parents earnings while in the workforce. Your dependents may also be eligible for SSDI benefits based on your earnings.
- Supplemental Security Income Program
- SSI benefits are paid out as cash assistance to people with limited incomes and resources who are elderly, blind or disabled. These benefits may also include blind or disabled children. SSI payments are a federal benefit funded by the general fund of the United States not the Social Security trust fund. Some states provide additional state supplemental benefits in addition to the federal SSI payments.
In some cases, people may be eligible for both SSI and SSDI at the same time. The Social Security Administration calls these concurrent benefits. This can happen when a disability qualifies you for Social Security Disability Benefits, but you only get a small amount of monthly SSDI benefits. This may qualify you to receive SSI benefits as well.
Comparing SSDI and SSI Programs
|Up to 85%|
Income Taxes for Other Benefit Programs
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Questions About The Social Security Administration
How Do I Apply For Disability Benefits?
To apply for benefits, contact the Social Security Administration at 1-800-772-1213. They have a TTY phone connection at 1-800-325-0778. You can ask SSA to send you the correct forms, and they can answer questions you may have.
How Do I Apply For Supplemental Security Income ?
To apply for benefits or to ask questions, contact the SSA at 1-800-772-1213. They have a TTY phone connections as well at 1-800-325-0778.
Supplemental Security Income is an income assistance program administered by the Social Security Administration for people who are elderly , blind, or disabled who don’t have many assets and who don’t earn much money
To apply for benefits or to get more information about the SSA retirement program, call 1-800-772-1213. They have a TTY phone connection as well at 1-800-325-0778.
How Do I Apply for Survivors’ Benefits?
A family member or other person responsible for the beneficiary’s affairs should do the following:
How Do I Apply For Medicare Benefits?
If you are already getting Social Security retirement or disability benefits or railroad retirement checks, Social Security will contact you a few months before you become eligible for Medicare and give you the information you need to register.
If you are not already getting checks, you should contact Social Security at 1-800-772-1213 about three months before your 65th Birthday to sign up for Medicare. They also have a TTY phone connection at 1-800-325-0778.
Can You Still Work While Receiving Social Security
You can continue to work while you receive Social Security benefits. But there is a limit to how much you can earn and still receive full benefits. The earning limit may be adjusted each year.
If you earn above the limit, Social Security will deduct a certain amount of your benefits each year.
Social Security Benefits, Earning Limits and Penalties
|SSA deducts $1 from your benefits for every $3 you earn above the limit|
Average The Highest 35 Years
The Social Security benefits calculation uses your highest 35 years of earnings to calculate your average monthly earnings. If you do not have 35 years of earnings, a zero will be used in the calculation, which will lower the average. In the table below, the highest 35 years are listed in Column G.
Total the highest 35 years of indexed earnings, and divide this total by 420, which is the number of months in a 35-year work history, to find the Average Indexed Monthly Earnings.
For our example worker, who was born in 1953 and turned 60 in 2013, the highest 35 years of wages total $1,919,040. Divide by 420 to get an AIME of $4,569.
|How to Calculate Your AIME for Social Security Benefits|